Home > Federal Bills > Putting those sequestration cuts in perspective

Putting those sequestration cuts in perspective

December 12, 2013

The current Congressional budget deal agreed to by Rep Ryan takes away the very small fiscal victories that have been gained in recent years. I says “very small’ fiscal victories because these sequestration cuts were in fact almost negligible in the grand scheme. To put it in perspective here is what Veronique de Rugy has to say on the topic:

While the sequester has been widely presented as deeply cutting federal spending over a ten-year period, there is no actual reduction in overall spending levels. Rather, sequestration merely slows the overall growth in spending slightly between 2013 and 2023. Total spending will increase by $2.31 trillion during that time period. From 2013 to 2021, the period when automatic spending cuts are to be enforced, spending will grow by $1.73 trillion, or 49 percent. Non-war defense spending in particular takes a hit in 2014 but increases in 2015 and keeps rising by $92 billion to $590 billion, or 18 percent, in 2021. In the absence of the sequester, federal spending during that time would have been $1.87 billion. The impact of sequestration on overall federal spending represents a small reduction in the growth of spending rather than an actual spending cut.

The emphasis above was added by me. Sequestration is NOT a tool to cut spending in the traditional sense. Rather it slightly reduces the increase in spending from year to year, and mostly in future years when a different budget will be in place anyhow. Which brings us back to the ‘small victory’ for fiscal conservatives. This chart from Veronique puts the ‘draconian’ sequester cuts in perspective.

Sequester-Chart-Dec2013-1000

Image Source: Mercatus Center, George Mason University

Looking at the chart it is hard to give credibility to sources that call these cuts ‘draconian’. In fact the sequestration only reduces the total spending increases over the next decade by about $130 billion dollars. When talking about a multi-trillion dollar ten-year budget, that slight decrease can be seen as peanuts. This budget once again shows certain DC politicians are willing to bankroll the current government expenditures on the back of future generations. I have a feeling this move by Ryan will be a huge election issue in 2014. I also believe the budget will pass the House and Senate with very little real resistance…

  1. Merlyn Schutterle
    December 12, 2013 at 2:22 pm

    But it seems to me that if we don’t keep putting money in the economy, our system will collapse because it has to grow to survive. The only way we can keep it growing is to use the natural resources at a rate we that cannot be sustained. We need population growth to keep the economy growing which uses up resources faster too. Are we just destined to implode at some point anyway?

    Inflation is a tax it’s self and that is how we have maintained our ability to pay off our debts.

    My favorite bread only cost $4 a loaf two months ago, but now it’s $4.69. While I can still live pretty comfortably within my budget, I am starting to notice my purchasing power going down. If we all cut down and we all have less to spend, how are the poor going to survive? That looks like a plan for a civil war. People are not going to quietly starve to death on the streets.

    It seems to me both capitalism and socialism are destined to fail.

    • December 12, 2013 at 2:39 pm

      Well, well don’t really have a free-market capitalism system here in the US. And we haven’t had anything near it for over a century. Our current unsustainable inflation rate comes from things such as the federal reserve, regulatory burden, taxes, and wasteful spending (private and public). If things continue like they are our purchasing power will continue to decline.

  2. Merlyn Schutterle
    December 12, 2013 at 2:55 pm

    It’s going to decline anyway. Almost everything I buy is made with cheap Chinese labor. For us to think we can compete with that is plain silly.

    Our whole economy is built on waste. That is what keeps it going.

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